Protecting your personal property from business creditors

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Protecting your personal property from business creditors

When you are in business you want to expose your personal property to as little risk as possible. This is one of the reasons for setting up a separate legal entity for your business, such as an incorporated company, and for keeping your personal affairs and finances completely separate from your business.

Shareholder liability

When you incorporate a company, the shareholders get limited liability protection. That means their liability for the debts of the company is limited to the amount they have ...

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Business, Trusts

Trustees’ Duties

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Trustees’ Duties

The duties of trustees of a charitable trust are contained in the trust deed, Trustees Act 1956, Charitable Trusts Act 1957 and Charities Act 2005.  The duties continue until the trustee resigns, although in certain circumstances they can continue after resignation.

The primary duties of a trustee are to:

  • comply with the terms of the trust deed that created the trust;
  • act honestly and loyally; and
  • act in the best interests of the trust.

Additionally, all trustees have an obligation to:

  • treat the trust’s potential beneficiaries ...
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Charities, Trusts

Trustee Liability – Charitable Trusts

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The Trustees of the board of an incorporated charitable trust are generally not personally liable to the creditors of the trust.

Charitable trusts can be incorporated under the Charitable Trusts Act 1956.  An incorporated charitable trust is a separate legal entity and is liable for the obligations of the trust.  Unless the trustees expressly undertake personal liability the trustees of the trust should not be personally liable to the creditors of the trust.

The protection gained by trustees once they incorporate the ...

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Charities, Trusts

Gift duty to be repealed – making gifting to your trust free!

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The Government is considering repealing gift duty. Gift duty is a tax that you must pay when you give away more than $27,000 worth of property in one year. This may be by cash, forgiving a debt, transferring a house or other property to your trust. The original purpose of gift duty was stop people getting around the estate duty rules. The estate duty rules were abolished in 1992. Gift duty was retained to stop people giving away large assets ...

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Tax, Trusts

Trusts tainted by new associated persons rules

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Legislation has been passed amending the definition of “associated persons” in the Income Tax Act 2007. Trustees are now associated with a trust if they hold the power to appoint or remove trustees. One of the consequences is that a trustee who is a dealer, developer or builder will “taint” the trust with that status (and vice versa). Once tainted, income tax may be payable on the sale of property that was acquired after becoming tainted.

In particular, your independent trustee ...

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Tax, Trusts